Property Factors (Managers)

Property Factors, also known as property managers, are employed by you and your co-owners to manage the common parts of your building. Property Factors are governed by the Property Factors (Scotland) Act 2011.

Overview

Calling your Property Manager a “Factor” dates back to the days when most properties were rented and the Factor worked on the landlord’s behalf. This has led some to think the factor still owns the common parts of the building and has responsibility for dealing with all common repairs.

In fact, your property factor, whether private, council or housing association is employed to act on owners’ behalf to manage the common property. It is the owners’ responsibility to make sure the common parts of their building are kept up to standard and the factor is there to help owners do this effectively.

Property factors are well managed and regulated. In many areas, owners have a choice of several private or housing association based organisations. Owners can choose the levels of service that they want though this may sometimes require owners to change their factor.

Do we need a Property Factor?

If you do not have good property management, it is very likely that your building will fall into disrepair and not keep its value.

There is no doubt that common property management and building repair has become more complex and all owners will at some point require professional help. This is particularly the case where there are large numbers of absentee owners, and in larger modern developments where there are lifts, security systems and mechanical ventilation and pumping systems. Property factors have developed professional expertise in both management and technical areas and provide a “one stop shop” that can take away many of the property management headaches that affect common properties.

Somewhere between a third and a half of all flat owners “self factor”– do it themselves - but it can be hard work and it can be difficult to get contractors to work for you as they may be concerned that they will have to chase every owner to get their bill paid. In some parts of the country there are no factors and owners will be obliged to organise repairs themselves – but other professionals such as surveyors and architects can be brought in to help assess what repairs are required and manage builders.

Some owners are obliged by their Title Deeds to have a factor and, in new build properties and Right To Buy properties, the property manager may be named.

The Property Factors Act

Property factors are governed by the Property Factors (Scotland) Act 2011 which has defined minimum factoring standards. Many firms previously delivered to these standards and beyond, and still do, but now all firms are clear on the requirements. The Act also requires Factors to register and work to a Code of Conduct which sets out how they should deal with owners and repairs. They must also provide owners with a Written Statement of the services they provide. The Act also set up a judicial complaints procedure deal with cases that can’t be resolved through the factor’s internal complaints procedures.

How to find a Factor

1. What to look for

Like any other service, you should shop around to find a Factor that offers the best value for money for your block - property managers with the lowest annual fee may not offer all the services you need.

Draw up a list of your essential requirements. This could include:

experience with your type of building

regular / frequent property inspections

attending regular owners meetings

type of insurance offered

how they will deal with debts

taking legal action on your behalf

how often they will send bills and how you can pay, late payment charges, etc.

how they manage repair contractors – how much work do they backcheck?

use/ non–use of own building division

Sound out a number of firms and housing associations and draw up a shortlist to present to your co-owners. Try and arrange a meeting so you can interview prospective factors - ask them to bring the person who will handle your building on a day to day basis.

2. Where to find a factor

While factors are fairly numerous around Glasgow, it can be harder to find one in other parts of Scotland.

Many Property Managers are members of the Property Managers Association of Scotland (PMAS) and you can find a list of their members on their website.

Other private sector managers may be found through internet search.

A number of housing associations also offer private property management. You can search the list of housing associations to find one near you. You can then check the register of property factors to find out if they offer a service to private owners. While housing associations need to register if they provide a service to owners who live in a block in which they already have properties, this doesn't mean that they will necessarily take on other blocks of flats to which they have no connection at present.

3. Will they take you on?

Some property managers will be reluctant to take on problem blocks where there is a history of debt or the property is in poor repair. You may need to give repair commitments and get your co-owners well organised before you will find a manager to take you on.

Getting the best from your Factor

Where there are problems, it may not be the factor’s fault.

they may not have been told of changes in ownership

owners may ignore their letters

no-one tells the factor about problems assuming that someone else will do it

owners may encourage the factor to go for patch repairs when a bigger job is really required

The best property management happens where there are active and concerned owners working alongside professionals.

hold regular meetings with your factor

consider setting up an owners association

your factor can tell you who has not replied to letters etc (but they may have confidential information that they cannot give you)

speak to owners who don’t respond to factor’s letters - tell these owners how important the repair is and where they can get financial and legal advice

if the service you pay for does not include maintenance surveys etc, consider paying extra for these every 5 years

Floats and advance deposits

Almost every factor will ask owners to pay a float or advanced deposit. Most self-factors and Owners Associations will also do this. Your Title Deeds may also require you to maintain a float.

It means that there is working finance available to carry out minor repairs quickly without having to get every owner to agree. The float covers the gap between contractors being paid and owners paying their quarterly factoring bills. If factors were required to carry these financing costs, along with the debts of non-paying owners, they would need to raise additional income from elsewhere.

The float should reflect the current cost of repairs and this means you may be asked to increase the float from time to time.

The float is your money, it should be kept in a separate “client account” and it should be returned to you when you sell or change factor (minus any remaining charges and fees).

Some owners have concerns about the float. This may be because they think they will not be able to get problems with repairs dealt with if the contractor and factor have already been paid. However your factor will almost certainly be providing contractors with considerable amounts of work and can use this as leverage to get problems dealt with. Any complaints about the factor can be dealt with through the complaints procedure.

Your factor may suggest you pay your bills by direct debit. This can have advantages in spreading costs, making budgeting for repairs easier. The factor may be able to waive the float if you do this. Like the float, any money you pay by Direct Debit remains the owners’ and should be paid into a separate account.

Your factor may also suggest you set up a building reserve fund or sinking fund – we strongly recommend you save for repairs. The amount you save should be based on the condition of your building and your factor should be able to advise you on this.

Register of Property Factors

Anyone who manages a building or common landscaping on behalf of groups of owners as part of their business must be registered. This includes private Property Factors, Councils and housing associations

If you are self-factoring or managing the building on behalf of your co-owners and do not charge owners, then you do not need to register.

It is a criminal offence to operate as a Property Factor while not registered.

A Factor must be a “Fit and Proper Person”. Someone who has a criminal conviction or who has court or tribunal judgements against them or failed to comply with the Property Factors Act 2011 may not be allowed to register. Re-registration is required every 3 years.

Using the Register

The Register will give you information on property managers contact details and the number of properties managed in their portfolio. The Register can be searched by specific address to find who manages a property or piece of land or by the Factors name.

The Code of Conduct

Dealing with problems

If you don’t agree with a bill or don’t like the way work was carried out or have any other problem, don’t just ignore the Property Factor’s bill or you will be treated as a non-payer. Other things like your common insurance could also be jeopardised by with-holding funds.

Contact your manager – expect them to be out and about visiting properties, but try to speak to the person who deals with your property every day.

Keep copies of any letters or emails that you send and a note of any phone calls that you have made, including to whom you spoke and what they said.

Your Factor should have a published complaints procedure in your Written Statement of Service.

Changing your Property Factor

Your Title Deeds may set out how you hire and fire your property manager. It is usually a majority decision. If there is nothing in your Deeds, or individual Factoring Agreement, then the Tenements Act applies – again a majority decision. If you have a named property manager in your Title Deeds, you will need to get a two thirds majority agreement to change your property manager.

Before changing your Factor, you should ask them to come to a meeting of owners to discuss your problems and negotiate a better service. If that doesn’t resolve your problems, call another meeting of owners and take a vote on changing factors. If there is a majority decision to change, ask all the owners to sign a letter which you can send to the factor. You just need to say that you have taken a majority decision to change factors and ask them to take the appropriate actions to close accounts, return any floats or deposits or pass information to your new manager etc.